Deutsche Bank boss 'optimistic' despite massive loss

Deutsche Bank boss 'optimistic' despite massive loss
Deutsche Bank boss 'optimistic' despite massive loss

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Hind Al Soulia - Riyadh - FRANKFURT AM MAIN — Germany's biggest lender Deutsche Bank lost 5.7 billion euros ($6.3 billion) in 2019, in large part due to thousands of job cuts under a massive restructuring, but chief executive Christian Sewing on Thursday declared himself "positive".

"We reported a sizeable loss for 2019 — and yet I feel satisfied and positive," Sewing wrote in a note to employees following the fifth year of losses in a row.

The bank's red figures for last year were "entirely driven by transformation-related effects," Deutsche had earlier said.

After taking office in May 2018 and an abortive attempt to merge with cross-town rival Commerzbank early last year, Sewing in July announced an umpteenth restructuring.

The plan calls for Deutsche to retreat from some activities and regions of the world it ventured into during its breakneck expansion prior to the financial crisis.

Instead, bosses want to refocus the bank on its business with corporate clients and its home region of Europe.

Meanwhile, 18,000 jobs are for the chop — 4,100 going last year alone, for a headcount of 87,600 by the end of 2019.

A total of three billion euros went on charges, writedowns in the value of intangible "goodwill" assets and costs relating to the restructuring and severance pay for those first job cuts.

And tax effects related to the restructuring weighed on the bottom line to the tune of 2.8 billion euros.

Deutsche reported revenues of 23.2 billion euros, down eight percent year-on-year, and a pre-tax loss of 2.6 billion.

Nevertheless, shares in the bank gained slightly, adding 2.5 percent to trade at 8.17 euros around midday in Frankfurt (1100 GMT), topping the DAX index of blue-chip shares, which fell 0.9 percent.

Despite the hair-raising headline figures, Sewing told reporters at a Frankfurt press conference that 70 percent of the 7.4 billion in costs Deutsche expects from the restructuring up to 2022 have now been accounted for in its results.

And despite 2019's losses, "with our strong capital position... we're very confident we can finance our transformation with our own resources and return to growth," Sewing said.

At 13.6 percent, the capital ratio — a measure used by supervisors to judge banks' resilience — remains strong.

The level was "higher than most of our European and American competitors" and "an excellent basis to develop our business and become sustainably profitably," Sewing said.

Looking ahead, the bank confirmed its medium-term objectives, aiming to reach a return on capital employed — a key measure of bank profitability — of eight percent by 2022.

Last year, the gauge stood at -11 percent.

Last year's turbulence has prompted bosses to give up half their bonuses for the year, leaving around 13 million euros to divide between the board.

During the years of heavy losses in 2015-17, executives were denied the extra payouts altogether.

Meanwhile shareholders will be offered a small dividend at the bank's upcoming annual general meeting.

Units belonging to the so-called "core bank" of businesses Deutsche wants to continue into the future reported a pre-tax profit of 543 million euros, the bank reported.

Counting out a range of one-off effects, that result would have risen to 2.8 billion euros, Sewing said.

Operating profits at the investment bank, the former flagship division hardest hit by cutbacks, slumped by around half last year, although currency and bond trading brightened the picture in the final quarter.

While asset management reported rising profits, pre-tax earnings at the corporate bank slumped almost 90 percent and the retail bank reported a net loss on falling revenues.

A unit set up to divest assets not useful to the bank's new strategy reduced its holdings from 56 to 46 billion euros in the fourth quarter alone, while making a pre-tax loss of 3.2 billion euros over the year.

Looking back to 2018, the bank as a whole was forced to revise its result for that year down, from a 267-million-euro profit to a 52-million-euro loss.

The 2019 net loss was the second-worst in Deutsche Bank's history, after the 6.8 billion euro loss booked in 2015 following massive fines over transgressions in the investment bank. — AFP

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